Democrats Unveil $40 Billion Plan to Expand, Improve Broadband → Re: Time for an infrastructure package

Better plan. Remove the income cap on Social Security contributions. Significantly increase the Earned Income Tax Credit for lower income families. No need for an across the board tax cut that only benefits the top ten percent.

raise the tax on hedge funds.................../

I am not so sure about that. I am not sure it would generate much tax revenue. I would put a two cents tax on trading. All that hypervelocity trading might generate some decent tax payments.

Already been tried in Sweden and it's a terrible idea, so much so they got rid of it.

quote:

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On the day that the tax was announced, share prices fell by 2.2%. But there was leakage of information prior to the announcement, which might explain the 5.35% price decline in the 30 days prior to the announcement. When the tax was doubled, prices again fell by another 1%. These declines were in line with the capitalized value of future tax payments resulting from expected trades. It was further felt that the taxes on fixed-income securities only served to increase the cost of government borrowing, providing another argument against the tax.

Even though the tax on fixed-income securities was much lower than that on equities, the impact on market trading was much more dramatic. During the first week of the tax, the volume of bond trading fell by 85%, even though the tax rate on five-year bonds was only 0.003%. The volume of futures trading fell by 98% and the options trading market disappeared.[1] 60% of the trading volume of the eleven most actively traded Swedish share classes moved to the UK after the announcement in 1986 that the tax rate would double. 30% of all Swedish equity trading moved offshore. By 1990, more than 50% of all Swedish trading had moved to London. Foreign investors reacted to the tax by moving their trading offshore while domestic investors reacted by reducing the number of their equity trades.

As a result, revenues from these taxes were disappointing. For example, revenues from the tax on fixed-income securities were initially expected to amount to 1,500 million Swedish kronor per year. They did not amount to more than 80 million Swedish kronor in any year and the average was closer to 50 million.[3] In addition, as taxable trading volumes fell, so did revenues from capital gains taxes, entirely offsetting revenues from the equity transactions tax that had grown to 4,000 million Swedish kronor by 1988

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If you are referring to the 1986 transaction tax, it started at 1% for the transaction and then ramped up to 2%. That is really high, especially for a 3rd or 4th tier market (as opposed to NYSE). As for that note in the quoted article about the price decline, that was a global thing. The US market that July dropped almost 8% and the US moves Sweden, not the other way around, specially back then.

A few pennies per TRADE is not going to move the market at all, but there probably are not enough daily TRADES (we know what stock volume is, not sure what trade volume is) that it would not generate earth shattering revenue.

You would do better to generate revenue to call all income as income (abolishing the discounted capital gains rates on all non IPO stocks as the economy does not benefit from the on going trading of used stocks, it is zero sum).

Sure but for most capital gains tax is double taxation as they were already taxed on the income they invested. If that is your sole income then sure.

That is true for anything. I started a business with already taxed money (there was no revenue to deduct the investment against) and now the return on that business is taxed at full income rates and will be forever while those with qualified dividends pay a lower rate. Why should my investment be taxed at 50% but someone else's at only 20%, when I actually contribute to the economy and traders of used stocks contribute nothing to economic growth.

PLUS my business as an entity is subjected to truckload of other taxes (such as property tax) that buying a stock isn't subject. If I do not have inputs, the government will quickly convert (take) my asset (for not paying the tax) and make it theirs. Then, I pay people with high marginal propensity to consume which generates even more tax revenue (and reduces consumption of government services). I should be the one with the discounted tax rate to account for all of the economic activity and additional tax revenue my operations generate at the local, state and federal level. As I mention, someone who buys a used stock contributes absolutely ZERO to the economy. Buying a share of Apple stock, Apple doesn't see a dime of it (there is no investment 'in the economy'). It is a zero sum game because there is nothing of value created in a stock transaction as there is in business where the outputs are more valuable than the sum of their inputs (and thus the profit).

The capital GAIN is the difference between the buy and sale price. That difference is income and should be taxed as such. Nothing is double taxed. If you buy a share for $40 with taxed money and it goes to $100 then sell it, you don't pay capital gains on $100, you pay on $100-$40 or $60 and that is income by any definition and should be taxed as such.

Capital gains being double taxation is a myth. The capital gain is only the PROFIT on the goings on, just as my business investment generates a profit. Even for the dividends (which are not capital gains), the corporation pays tax on their profit and then if it chooses to pay a dividend, the shareholders are taxed on that dividend. That is still not double taxation as those are 2 separate legal entities, just as if I take $1 in taxed money to 7-11, the proprietor pays income tax on his/her profit of that $1 transaction.

A substantial portion of truly long-term capital gain is inflation, which is the result of government-directed monetary policy. That is the reason for the difference in the tax rates. Short-term capital gains are taxed at higher rates, like income. Without that adjustment, the government would own everything in a few decades.

Then long term should be longer than one year and instead of a flat 50% deduction, the original price should be indexed for inflation. If indexed many "gains" would, in fact, be losses.

Income should be treated as income. The cost of inflation simply, and ever so slightly offsets the massive benefit of not having to do any "work" or create a dime of economic value for the gain. We should respect income from work as much or more as income from capital but the opposite is true. We punish income generated by labor while rewarding income generated from trading used paper.

Again, someone digging a ditch is CREATING NEW VALUE.

Someone trading used stocks creates ZERO NEW VALUE.

In anything, trading used stocks should be taxed at HIGHER than income rates to encourage economic activity that CREATES ECONOMIC VALUE like starting a separate value generating enterprise.

Unfortunately there are too many who are so angry at their own failures or perhaps just so dimwitted that they blindly lump high income earners that derive their income from value generation (which has all of its peripheral benefits) with those who generate and income merely trading used paper. To them, they are all "the rich" who must be punished and deprived of their ill-gotten gains.

Make up your f'n mind, dude. Libertarian Tard, Marxist, or Trumper ... pick a team, any team.

That is true for everything. That is true for every TVM calculation.

Inflation is not the justification for capital gains rates. The justification is supposedly the economic growth that comes from investment and there is obviously a strong special interest vested in keeping the capital gains giveaway. Alas trading used stocks does nothing to contribute to growth. It is zero sum as there is no value created in the trading of a used stock. The value is created by the company so it is the company that should be stimulated to create value through getting a break, not the people trading garage sale stocks.

Let's take the machines I buy as an example. Not only do I have to expense the machine over time (so the deduction is taken against future, less valuable dollars) but I pay property tax on the machine, in perpetuity. Yet the return on my investment that the machine makes me, is taxed as full income rates. But if instead of creating value by using the inputs of machine, raw materials and hiring someone (who also pays income tax and has a high MPC), I bought a piece of used paper, I can get a return that is taxed at a lower rate. Why would we encourage the latter over the former?

Under no circumstances should someone making $60K over 13 months digging a ditch 60 hours a week, or like little ole me, running a manufacturing business employing just under 50 people in various locales, should be paying a higher rate than someone making $60K trading a used stock.

OK, I guess I was correct to use the word might and not the word would.
What a mess.

There is no single plan that will appease everyone.

I would

•Remove the social security cap
•Lower corporate rates to 15% since consumers pay it anyway
•Allow immediate expensing
•Allow deduction of all education expenses for accredited 2 year public colleges and universities subject to income limitations
•Raise the AMT threshold and then index it to inflation or CPI
•Raise the death tax limit to say $20M to ensure family businesses are not liquidated to please Uncle Sam.
•Tax CREDITS covering student loan interest for those who go to public colleges and universities.
•Cap mortgage interest based on a multiple of the FHA loan price chart for a particular zip code
•Eliminate the deduction for 2nd homes
•I would preserve the deductions for state and local taxes (double taxation is horsecrap)
•Cut rates to those making under $1M
•Create new brackets for those at $1M, $5M, $10M of 40, 43 and 45% respectively
•Eliminate capital gains rates for "used stocks", all income should be treated as income and trading used stocks does ZERO for the economy
•Tax credits for full tuition at public 2 and 4 year in-state colleges for certain majors that are shown by BLS to contribute most to the economy (such as STEM...but if you are liberal arts majoring in sanskrit, you pay your own tuition).
•All healthcare expenses, including nursing facility, etc, should be deductible with no minimum or cap

To start...

•Oh, and Tax credits for pre-K because it has been shown to make smarter more well adjusted kidlets and they generate more $$$ for the economy in the long term

If they cut corporate and rich people taxes, then the compromise is to raise the minimum wage and to make a single payer healthcare program.

Good choices but there is no "death tax". There is an inheritance tax. You are not taxed for dieing. You are tax for giving inheritances. You can avoid the tax entirely by leaving your money to charity instead of worthless drone children.

You are absolutely taxed for dying. Saying you aren't is like saying you aren't taxed on your income because you have the option not to pay the tax by donate every penny you make to charity.

So we liquidate small businesses that took a lifetime to build to appease Uncle Sam. That is counter productive and harms more than the family that worked their entire lives to build it.

You can still get your revenge on success with a higher threshold that ensures small businesses are not liquidated to pay the tax. The alternative is everyone is fired and stuff sold and rich kids take less, or in my case, as part of the estate plan, the business is moved out of the taxing jurisdiction (inversion) taking the jobs and economic activity with it. I will not allow Uncle Sam to steal my life's work.

That's baloney. Any lawyer can come up with a plan to save the business. If it's a corporation the founder holds the stock in joint tenancy with right of survivorship. That takes it out of the estate. If not a corporation, you put it in a trust which also removes it from the estate. The complaints are from Paris Hiltons and Donald Trumps who want to be inherited Lords and Ladies.

And no one wants revenge on success. We want to avoid useless drones living off their father's employees' labor. That Horatio Alger story is a myth.

Also, usually the first thing heirs usually do is dump the family business or farm because they want to live a jet set lifestyle on the stocks and bonds they can buy with the proceeds.

Corporation has shares and the "value units" of the unlisted shares are absolutely subject to the taxation. The shares are assets of the estate.

And putting assets into a trust doesn't exempt it from the tax, it just avoids probate and the money can be metered out over a billion years. You don't need a trust to gift away stuff yearly before death, but it is not enough to avoid liability.

As I mentioned, in a previous post, I would raise the estate limit to $20M to ensure small businesses (those under 100 employee types) are not liquidated to pay the tax. Even $10M would save most small businesses from destruction. You still get revenge on plenty of Trumps and Hiltons without small businesses being sold off at a fraction of their true value (because often these small businesses only have value because of who is managing them) just to stay viable and appease the greed of Uncle Sam.

There is no answer for this. Those who do not have a lifetime of work to protect think that the son of daughter of someone who built a business is automatically a leech. Not every son or daughter is a Paris Hilton. In small businesses, the kids often get an early start and work their way up through the company, taking over general management from mom and pops when they decide to retire, ensuring that mom and dad continue to have a nice income. They do this only to have that legacy destroyed when both pass. If you have a business and home valued at $10M because you might own the building and have some machines in it, paid off the house, that doesn't mean everyone is super rich and can just cut a two million dollar check to Uncle Sam. But that is exactly what happens when pops dies, leaves the business to mom (tax free), and then mom croaks (so there is no $5+$5 split like there would be if they both died in a crash). Uncle Sam rolls up demanding your nut. You can do the $13,999 giveaways until you're blue in the face, the sons and daughters building upon mom and pop's legacy are still forced to sell it to cover the $2M bill. It is not uncommon in California to have the building force the problem A small business started in a concrete tilt up bought for $50K in 1965 could be work $8M now. Uncle Sam forces them to sell the building the business has been in for 50 years, for what, so greedy whiners can get the 1 in 100 who are the Paris Hilton types.

That is the reality for small business. Whether Paris gets $50M or $100M she doesn't know the difference, but those small businesses with 20, 30, 40, 50 people get hammered. I will avoid it because of my unique position, but most family businesses my size cannot.

No. it's same as saying you are taxed for working because you are taxed on the wages. Why am I taxed for working? Isn't that a wrong take on the income tax?

Because, as people will often remind you, social security is not a tax. It is a fund to which you contribute, so that later you can get your contributions back.

If you raise the cap, then all that will happen is that those that then pay more, will receive more later.

You do not "contribute". It is taken from you by force like every other tax and then when you are well fermented, you get welfare payments along with your taxpayer subsidized medicare benefit. And being you think it is not a tax, but rather a contribution to be returned, when does your employer get the 1/2 back that they paid in to SS on your behalf?

If it were truly a contribution, your estate should get all of its contribution back upon your death, or the benefits END if you live too long.

Make no mistake, it is welfare more than the ponzi scheme you describe and being welfare, should be subject to means testing.

Read the comments at the end of this article: »retiredamericans.org/rep ··· tically/

I know it is welfare, but is shouldn't be.

It absolutely should be. For a stable economy and for human dignity, there must be a safety net backed by the credit of the United States, that is immune from a cyclical economy or crooked banksters.

You may have bought into the "trust fund" narrative that was used to sell SS originally. Sorry to say but the architects of SS admitted that was just marketing to get Republicans and certain Democrats to vote for the establishment of SS. SS is a money transfer system. High income to lower income. The main problem is the designers never planned on people living so long after retirement. Congress can cap benefits and uncap the income tax that pays for those benefits. Get the SS system on a more solid financial footing. It is another tax.

Exactly, and when founded, people got it without paying anything, but it was easy when worker to benefit ratio was 42 to 1, like it was just after WWII. Harder now that it is under 3 to 1. The ponzi scheme is collapsing and SS needs to be seen for what it is...typical tax and welfare government transfer payment. Once this is accepted, logic dictates we lift the cap on the tax contribution side and means test the benefits side. Then social security will forever be solvent for those who NEED it.

Means test? You mean penalize those who planned for retirement and reward those who didn't?

Yes, means test all welfare, including social security which is a tax on income just like any other then at an age determined by Congress, some welfare payments go out. When you die, you do not get all of your un-repaid contributions back and when you live too long, your contributions are never exhausted. At the same time your employer who paid the other 1/2 of your social security never sees a time of it back. It is a tax.

Which is the better alternative to solve the 2.9 to 1 worker to retiree ratio. Means test, cut benefits to everyone or raise the social security rate from 15 to 20% because the system as it is goes insolvent in about 20 years.

Bill Gates and Donald Trump don't need government transfer payments and in 20 years we shouldn't have the system going illiquid trying to pay them and those like them.

False, as there is a cap on the payout.
They pay more, but they only get the maximum back.
Getting rid of the SS cap is something only a smart person would do.

Well, what happens is that people get all of what they've paid into SS back after only several years, and then they get back more than what they've contributed, which I'm fine with.

Not true. Only would be true if there was no inflation. When I started paying gasoline was 29 cents and a new car was $3,000. A nice new house was $27,000 You can't compare the dollars I get now with the dollars I paid in. If everyone got there money back in a few years, theere would be no money on the books of the fund.

Yes you can make the comparison. There is a decent return even when adjusting for inflation. It is especially decent considering it is a return guaranteed by the credit of the United States and pays benefits in perpetuity. Social Security has saved millions of seniors from poverty.

»www.reuters.com/article/ ··· 20121018

Not quite. The higher your income, the less it contributes to your pension. Look up the calculationws, they are quite complex, but essentially a worker who makes $60,000 a year does not get twice the pension of a worker who makes $30,000 a year.

Don't talk to the 'Economist' about Economics or his peaked head will explode.

10%, ha! I'm reading that 80% of the proposed tax cuts would effectively go to the top 1% of income earners, and half of that would end up with the 0.1%. That leaves 20% of the tax cuts going to the bottom 99% (of which, you're probably correct that the majority of that will go to the top 91st through 99th percentiles.
Just eliminating the deduction of state and local taxes (incl. property taxes I presume) is going to bone most middle class taxpayers, especially if they itemize, because what with the (fake) doubling of the standard deduction, they're getting rid of the personal exemption, which means if you itemize, you're not even getting the latter.

Beware of the sources. It is just political posturing as there is no bill.